Dispatches from the trenches of influence.

Bad News Handbook

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Corporate Communications

March 08, 2011

Some corporate brands get built without big-production epics. Reacting to the heated rhetoric on all sides of the nation’s energy debate, Ensign U.S. Drilling wanted to add its voice to the case for clean natural gas but without veering from its historically understated corporate personality.

The result was the company’s first-ever TV ad, produced in-house and featuring unscripted employees who give the sincere impression that they see the forest for the trees. (Disclosure: Ensign is a GBSM client.)

February 25, 2011

In Lewis Carroll’s classic tale, Alice faces a host of inexplicable anomalies: two-sided mirrors, time running forward and backward, the need to read jabberwocky and ambulatory chess pieces that cause no end of havoc.

In short, she went through the looking glass. And so are many companies having to deal with immigration investigations.

No doubt you’ve seen the headlines about companies including Chipotle Mexican Grill (disclosure: a long-time GBSM client) being subjected to “employment compliance inspections” by Immigration and Customs Enforcement, a unit of the Department of Homeland Security. In contrast to Bush-era bum’s rush raids on factories and business offices, the new modus operandi is what they call a “silent audit.” This is where ICE selects a good-size target company and then – without revealing why that company was singled out -- requires it to produce thousands of documents.

ICE reviews all of the I-9 employment eligibility verification forms, then alerts the company to any workers who do or may not have proper documentation. Typically, the company has no choice but to quickly fire those employees to put itself in compliance with standards it thought it was meeting, and to establish at least minimum position to begin negotiating with ICE toward resolving the situation.

Even so, the government fines the company for having employed people whose paperwork may not have been legit. And all during this process, ICE holds at least the threat of escalating its actions to even bring the company’s leadership up on charges.

There are a million issues with this approach to enforcing America’s immigration laws, starting with the fact that the employers are being investigated by a public agency as transparent as a wall of cinder blocks.

These companies are caught in a untenable double bind. They must check for illegal workers with each hire, and do so thoroughly enough to root out falsified documents. But whatever system they use must be applied uniformly across the board, or they will be sued for discrimination by the very potential employees they are required to investigate.

Almost none of the corporations that get the silent audit treatment have broken any law. Far from it. Federal laws only require companies to make a good faith effort in trying to not hire undocumented workers. But you wouldn’t think that from what these companies pay in hard dollars and damage to their brand reputations. Meanwhile, the governmental entity behind the chaos has no obligation to disclose why they started the investigation, what they find or even when the investigation is closed.

They are at liberty, however, to announce just about anything they want in relation to the investigation at any time they choose.

These ICE actions leave a lot of companies asking themselves if they have, in fact, gone through the looking glass into a world where infractions real, perceived or with no basis at all are taken as definitive. Where the people asking questions give no answers.

There’s a name for this kind of environment. If a company finds itself navigating through a world where logic doesn’t apply and two plus two equals purple, they are no longer playing in corporate governance and public relations.

They’re playing politics.

For many companies, their otherwise excellent legal, communications and investor relations teams aren’t enough. Now they will have to spend considerable resources on high-powered government relations executives – meaning lobbyists -- and a flotilla of lawyers who specialize in this byzantine parallel universe.

The only way out is back through the looking glass. It’s a process that resolves itself on a political timetable governed by the next election cycle and the sessions of Congress, not a quest for justice governed by the rule of law. This is a playing field where the chess pieces move themselves, where both the opponent and the referees speak an strange jabberwocky.

It an expense that creates no value, no brand equity. In the end it doesn’t really fix anything. But for companies that find themselves arbitrarily targeted, it is an unfortunately reality that has to be reconciled as quickly as possible.

December 21, 2009

Ten years into the new media era, the institutions we love to hate – government, banks, big business, media – aren’t any more willing to tell us what they’d rather keep to themselves. The constant outing of reality TV frauds, tax-supported executive bonuses, front groups and scumbag celebrities is still a function of how Americans use the Internet to inform and entertain themselves. Not the other way around.

Social media is getting less social.

Over time, millions of people will stop using social media sites because 1) their bosses lock them out during working hours, 2) they tire of all the commercial clutter or 3) they learn how those revenue-hungry companies are sharing their profiles, posts and friends lists.

The Rocky Mountain News is still dead.

For all the outraged hang-wringing and new ventures, media consumers in Denver and many other American cities are still only willing to support one local daily newspaper. Barely.

Journalism, however, isn’t dead. It’s just changing.

So-called “advocacy” media will flourish as more formerly ad-supported news outlets – or individual journalists and commentators -- become funded by interest groups, politically leaning foundations, single corporations and even government. Whether you think it’s biased or not will depend on your point of view.

No company will ever hide its identity again. Har. Kidding.

Getting nabbed isn’t as certain as, say, driving through a DWI checkpoint with an open bottle of cream de menthe in your lap. But some well-known brand out there is going to have a major PR problem when it draws the first high-profile enforcement of the Federal Trade Commission’s new transparency in marketing rules. . . . . . . . . . .

November 12, 2009

Here’s a common crisis communications question: Isn’t it best for a company to stave off reporters until all the facts are known and there’s “good news” to tell?

Rarely.

Stonewalling is usually as effective in holding off media coverage as pushing water uphill with a fork. Not only do your pants get wet but you look like a idiot.

News is going to happen with you or without you. It doesn’t matter if don’t have all the facts.

Executives and lawyers sometimes forget that news isn’t a conclusion. It’s a consumer product. It gets packaged to last as long on the shelf as possible. One headline follows another as new information is confirmed or disputed, as ramifications and fall-out are analyzed.

Media don’t have to get it all or even get it right. That’s why there’s another newspaper tomorrow. Or another web update in ten minutes.

Your response becomes an aspect of any ongoing crisis or controversy story. Sometimes it becomes the story.

To not participate in negative news is death by a thousand paper cuts. You force reporters to discover information, opinions and perspectives that will be rushed out, regardless of whatever contentions you have about accuracy or context. You likely just prolong and make more convoluted the bad publicity you’re trying to avoid.

Does that mean you have answers to every question? Of course not. But there’s a huge difference between hiding from the press and making a sincere effort to explain why you can’t answer a specific question, or why it isn’t appropriate for the CEO to be interviewed now. (But don’t say that “lawyers” won’t let you talk about things you’d otherwise be eager to explain. This will come back to bite you.)

Engaging the news media during an emerging PR crisis or controversy – including to respectfully decline comment – builds a foundation of credibility, even if you screwed up. You are acknowledging the legitimacy of the story and the media’s job. And that might buy you some breathing room to produce facts as quick as you confirm them, or at least be given the opportunity to respond to information and opinion before it’s rushed out there.

Good news or bad news, the rule is the same. Say only what you know to be true. But say it.

November 09, 2009

Even in the always-on Internet era, many companies and government
offices still rely on the old trick of waiting until late Friday afternoon to release bad news.

In most cases they're just making things worse come Monday. Here's why:

You stop nothing. People
who care most have news alerts, stock
tickers and other Internet tracking gizmos to get your stuff the
second it hits the fan. Your stock will still move in after-hours trading guided by speculation and negative expectations. Media outlets will still run breaking news, except this time you’ll be covered either by reporters who know to dig for whatever you’re trying to hide or by inexperienced weekend reporters who don’t know the situation.

You create a new credibility issue. Maybe ten people on the planet won’t perceive that you tried to bury bad news on Friday afternoon. You risk creating a whole new PR problem with stakeholders and media for thinking they don’t see you trying to sneak out the back.

You dig a deeper hole. Friday-night announcements don’t make bad news go away. They create a 48-hour vacuum for people to assume the worst. Some will interpret your move as a signal that there’s still another shoe to drop. You could be in a worse defensive position on Monday morning as you reopen the doors to angry shareholders, anxious employees and reporters working on follow-up pieces about your company mishandled a crisis.

You still announce on Monday anyway. Assuming you’re somewhat successful in burying your bad news over the weekend, you’ll have to deal with the response on Monday from people seeing the news for the first time. Now you’re dealing with two sets of responses: the people who are just hearing it, and the people who saw and reacted to it over the weekend.

The FTC already directs online reviewers to disclose if they’re being paid by advertisers. Under the new rules, however, every blogger, Twitter user or social network member must disclose any “material connection” with a company, product or service.

Taken literally, this connection could result in fines for bloggers who fail to disclose anything from getting a sample can of chili in the mail to having a spouse who owns company stock. While consumer advocates support the guidelines, some prominent bloggers argue that the rules in effect force them to disclose every business relationship they’ve ever had.

Enforcement is another matter. The FTC says it will primarily go after the advertisers rather than individual bloggers, though it will take into account how companies encourage transparency in their paid reviews and freebies. Beyond that, the agency will decide matters on a case-by-case basis – which basically means they’ll know deceptive advertising when they see it. What makes things even more convoluted is that the agency doesn’t say by what means it will handle these situations.

Given that the new transparency standards for bloggers are higher than what’s required of commercial news media and politicians, the FTC rules are generating considerable debate among marketers and social media proponents alike. Stay tuned.

ACCOUNTABLE FOR TYPICAL RESULTS.

Ads that feature individual consumer experiences with a product will have to state clearly what kind of results everybody else can expect. Soon to be history are those ubiquitous ads that whisper “results not typical” while showing some guy who lost 300 pounds drinking vitamin shakes.

ACCOUNTABLE FOR EMPLOYEES.

Employees thatpromote their company or its products online must “clearly and conspicuously” disclose who they work for.

The FTC urges that companies have social media policies as one way to avoid fines or other actions when employees pretend to be someone else – say, a happy customer or invigorated shareholder.

Keep in mind, however, that a recent Deloitte study found that a third of all employees don’t even consider what their boss might think before posting something online.

ACCOUNTABLE FOR CELEBRITIES AND RESEARCH.

A warning to every company that uses movie stars, retired quarterbacks and 70’s sitcom actors for promotional tours. Under the new FTC guidelines, both advertisers and their celebrity spokespeople can be held liable for making false claims as part of a commercial endorsement.

The ramifications are huge. Celebrities making the rounds of late-night talk shows, state fairs and Twitter feeds must disclose their business relationship with any company or agency that’s paying them to pump movies, books, products or even charities.

Companies that quote research must also disclose if they paid for the studies, or if they have any business relationship with the organization that did the research.

These standards go way beyond front groups and hidden clients. From now on, any failure to disclose corporate affiliations could be considered deceptive advertising. That’s going to hit a lot of marketing PR campaigns.. . . . . . . .

CBS News reported that a former Toyota lawyer has filed a federal racketeering suit against the company for “ruthlessly” conspiring to hide evidence about hundreds of roll-over accidents in which the roof caved in. The potentially damming case was filed in late July but took more than two months to make the news.

“In that respect,” Sherosky writes in the Detroit Auto Examiner, “it's hard not to at least question the media for bias. Does Toyota own a free-pass card in the press, when American companies like GM, Ford and Chrysler get slammed all the time?”

Toyota denies the allegations and says its former in-house counsel violated attorney-client privilege with his lawsuit and in the consulting work he did after leaving his job with a $3.7 million severance package.